Assume an asset cost $44,500 and has a current book value of $25,700. The asset is sold today for $21,900 cash. The firm's tax rate is 21 percent. As a result of this sale, the firm's net cash flow: A. will increase by exactly $21,900 B. will decrease by the difference between the $25,700 and the $21,900. C. will increase by more than $21,900. D. will increase by less than $21,900.
Baxter's Market is considering opening a new location with an initial cost of $548,700. This location is expected to generate cash flows of $242,400, $201,500, $187,800, and $241,000 in Years 1 to 4. What is the payback period? A. 3.04 years B. 2.18 years C. 2.56 years D. 2.93 years
Bloomfield Tires has assigned a discount rate of 13.2 percent to a new project that has an initial cost of $229,000 and cash flows of $77,300, $128,700, and $89,500 for Years 1 to 3, respectively. What is the net present value of this project? A. $1,421.16 B. -$4,899.03 C. $3,845.71 D. -$5,936.23